Explanation Given Information: The date of the transaction is 4 months since the last interest payment and the commission charge is $ 8.50 per bond. Formula used: Steps to solve the proceeds from sale of a bond: Step 1 : Solve the accrued interest since the last payment date with the help of formula, I = P R T . Step 2 : Solve proceeds per bond with the formula, Proceeds = Current market price + Accrued interest − Commission Step 3 : Solve total proceeds from sale with the formula, Total proceeds = Proceeds per bond × Number of bonds sold Calculation: The time since the last payment is 4 months, T = 4 12 Coupon rate is of 8.50 % , which can be denoted in decimal form as, 8.50 100 = 0.0850 To find accrued interest on the bond, substitute the values P = 1 , 000 , R = 0.0850 and T = 4 12 in the formula I = P R T and simplify as, I = P R T = 1 , 000 × 0.0850 × 4 12 = $ 28

8th Edition

ISBN: 9781305888715

Author: Brechner

Publisher: CENGAGE LEARNING - CONSIGNMENT

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Chapter 20.II, Problem 17RE

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To calculate: The accrued interest and total proceeds of the sale of Apple bonds, if number of bonds is 4 with a coupon rate of 8.50% and a current market price of 108.75

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Chapter 20.II, Problem 16RE

Chapter 20.II, Problem 18RE

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The accrued interest and total proceeds of the sale of Apple bonds, if number of bonds is 4 with a coupon rate of 8.50 % and a current market price of 108.75

Solution Summary: The author calculates the accrued interest and total proceeds of the sale of Apple bonds, if the number of bonds is 4 with a coupon rate of 8.50%

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To calculate: The accrued interest and total proceeds of the sale of Apple bonds, if number of bonds is 4 with a coupon rate of 8.50% and a current market price of 108.75

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